Viacom Cuts Ties WIth YouTube - TheStreet

Viacom Cuts Ties WIth YouTube

The media giant pulls its content from the Web site after failing to reach a revenue-sharing deal.
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Updated from 12:02 p.m. EST

Unless YouTube is ready for a commitment,

Viacom

(VIA) - Get Report

wants to stop letting the popular online video site take advantage of its content.

The parent company of media properties like MTV and Comedy Central has asked YouTube to remove more than 100,000 clips from the video-sharing Web site immediately.

After months of discussions with YouTube and its parent company,

Google

(GOOG) - Get Report

, Viacom said it hasn't been able to come to a "fair market" revenue-sharing agreement to make its content available to YouTube users.

"Filtering tools promised repeatedly by YouTube and Google have not been put in place, and they continue to host and stream vast amounts of unauthorized video," Viacom said in a statement Friday.

YouTube, which Google acquired last year for $1.5 billion, has became the Internet's premier destination for viewing video content. Google hopes to benefit from the sensational popularity of the site, but copyright issues are a concern, since much of the content that finds its way onto YouTube is owned by competitors.

Video clips from Comedy Central shows like

The Daily Show with Jon Stewart

are easily accessible on YouTube. While Viacom benefits in some ways from the exposure to its content that YouTube provides, it also has its own video Web sites that are losing out as its online audience gravitates towards the competition.

"The relationship between YouTube and Viacom is half cannibalistic and half marketing," says Aram Sinnreich, managing partner with Radar Research. "On the one hand, YouTube provides tremendous visibility and popularity for Viacom's content and brand. On the other hand, YouTube doesn't possess licenses to distribute it, and it's technically on the wrong side of the legal fence."

Viacom's move is the latest sign that a broader fight over YouTube's business model could be brewing. YouTube has signed licensing deals with

CBS

(CBS) - Get Report

and

General Electric's

(GE) - Get Report

NBC, but others have resisted partnering with the company.

Last week,

News Corp.'s

(NWS) - Get Report

Twentieth Century Fox sent a subpoena to YouTube demanding it reveal the identity of a user who uploaded stolen copies of recent episodes of its popular shows

24

and

The Simpsons

.

In October, Viacom asked YouTube to pull many copyrighted clips of Comedy Central shows like

The Daily Show

and

The Colbert Report

, and many of them were taken down. Shortly thereafter, Viacom allowed the clips to go back up as the two sides tried to hammer out an agreeable deal.

YouTube said Friday that it will comply with Viacom's latest request.

"It's unfortunate that Viacom will no longer be able to benefit from YouTube's passionate audience which has helped to promote many of Viacom's shows," YouTube said in a statement. "We take copyright issues very seriously. We prohibit users from uploading infringing material, and we cooperate with all copyright holders to identify and promptly remove infringing content as soon as we are officially notified."

The drumbeat of legal challenges to YouTube's content practices could complicate Google's justification of the rich price tag it paid for the Web site, though the controversy comes as no surprise.

"Everyone including Google expected these issues going into this venture, and this will probably resolve itself in the form of some kind of licensing agreement," says Sinnreich. "That said, this demonstrates that Google doesn't have carte blanche to use third-party content, and they're going to run into a lot hurdles trying to make YouTube a viable business."